Engineering management lecture slides

1. Engineering Management
Dr. Abu Bakr Siddique

2. Lecture Outline
• Major Kaizen Systems
– A suggestion system
– Small-group activities
– Total quality control (TQC)
– Total productive maintenance (TPM)
– A just-in-time (JIT) production system
– Policy deployment

3. Major Kaizen
Systems

4. Major Kaizen Systems
• Apart from the major kaizen concepts, an
organization must also implement certain
kaizen systems for successfully achieving a
kaizen strategy. The major kaizen systems that
should be in place are:
– A suggestion system
– Small-group activities
– Total quality control (TQC)
– Total productive maintenance (TPM)
– A just-in-time (JIT) production system
– Policy deployment

5. The Suggestion System
• Apart from Management-initiated kaizen,
employee generated suggestions can have a
remarkable impact on businesses.
• This concept is widely practiced in Japan and is
perhaps most effective there, as opposed to any
other country.
• This is because Japanese employees do not
expect to reap great economic benefits from each
suggestion. Constant improvements (Kaizen) and
dedication are features of the Japanese culture.

6. The Suggestion System
• Therefore, Japanese managers see their main role as
that of sparking employee interest in kaizen by
encouraging them to provide many suggestions, no
matter how small.
• The primary goal is to develop kaizen-minded and
self-disciplined employees.
• This allows the development of a suggestion system,
which functions as an integral part of individual-
oriented kaizen and emphasizes the morale-boosting
benefits of positive employee participation.

7. The Suggestion System
• This outlook contrasts sharply with that of
Western management’s emphasis (which is
much closer to our culture) on the economic
benefits and financial incentives of suggestion
systems.
• Nevertheless, even in our culture (and in the
Western culture) the development of self-
disciplined and kaizen-minded employees is
very important.

8. Small Group Activities
• Similar to the Suggestion System, small group
activities are informal tasks that are undertaken
by employees beyond their designated roles.
• They comprise of only a few individuals that
discuss and overlook issues like quality, cost,
safety and productivity on a voluntary basis.
• The goal is to provide alternate opinions and
point out any discrepancies that may have been
overlooked by Management.

9. TQC/TQM
• One of the principles of Japanese management
has been total quality control (TQC), which, in
its early development, emphasized control of
the quality process.
• This has now evolved into a system
encompassing all aspects of management and
is widely referred to as total quality
management (TQM), a term used
internationally.

10. TQC/TQM
• The T in TQC/TQM signifies “total,” meaning
that it involves everybody in the organization,
from top management through middle managers,
supervisors, and shop-floor workers. It further
extends to suppliers, dealers, and wholesalers.
• In TQC/TQM, Q, meaning “quality,” has priority,
but there are other goals, too—namely, cost and
delivery.
• The M refers to “management” and C refers to
“control” or “process control.”

11. TQC/TQM
• TQC and TQM might appear to have different
meanings, but the emphasis is the same – bringing
everyone together to improve quality.
• In TQC management must bring everyone
together to control individual processes with the
aim of improving product (service) quality.
• In TQM management must bring everyone
together to enhance overall management
performance and therefore to improve product
(service) quality.

12. TQC/TQM
• The idea behind TQC/TQM is that key processes
must be first identified, then controlled, and
finally improved on continuously.
• Management’s role in TQC/TQM is to set up a
plan to check the process against the result in
order to improve the process, not to criticize the
process on the basis of the result.

13. TPM
• TPM (total productive maintenance) focuses
on improving equipment quality as opposed to
TQC (TQM) which emphasizes improving all
individual process (overall management
performance) in order to improve
product/service quality.
• TPM seeks to maximize equipment efficiency
through a total system of preventive
maintenance spanning the lifetime of the
equipment.

14. TPM
• Just as TQM involves everybody in the
company, TPM involves everybody at the
plant.
• An increasing number of manufacturing
companies now practice total productive
maintenance (TPM) within as well as outside
of Japan.

15. JIT Production System
• JIT (just-in-time) is an inventory strategy that aligns
raw-material orders from suppliers directly with
production schedules.
• This method reduces inventory costs but requires
producers to forecast demand accurately.
• Companies employ this inventory strategy to
increase efficiency and decrease waste by receiving
goods only as they need them for the production
process.

16. JIT System
• The exact reasons for adoption of JIT in Japan are
unclear, but it has been suggested that it started with
a requirement to solve the lack of standardization.
During Japan's post-World War II rebuilding of
industry:
– 1) Japan's lack of cash made it difficult for industry to
finance the big-batch, large inventory production
methods common elsewhere.
– 2) Japan lacked space to build big factories loaded with
inventory.
– 3) The Japanese islands were (and are) lacking in natural
resources with which to build products.

17. JIT System
• Thus the Japanese "leaned out" their processes.
• They built smaller factories ... in which the only
materials housed in the factory were those on which
work was currently being done.
• In this way, inventory levels were kept low,
investment in in-process inventories was at a
minimum, and the investment in purchased natural
resources was quickly turned around so that
additional materials were purchased.

18. JIT Production System
• A company with a JIT system in place will be able to
get supplies delivered to it just-in-time. However, in
order to benefit from a supplier’s just-in-time
delivery, a company must first establish a just-in-time
production system (i.e. the best possible efficiencies
in its own internal processes).
• Through kaizen activities the just-in-time (JIT)
production system aims at eliminating non-value-
adding activities of all kinds and achieving a lean
production system that is flexible enough to
accommodate fluctuations in customer orders.

19. JIT Production System
• The JIT inventory system contrasts with just-in-
case strategies, wherein producers hold sufficient
inventories to have enough product to absorb
maximum market demand.
• TQC has overall quality as its major target while
TPM addresses the reliability and quality of
equipment.
• On the other hand, JIT deals with the other top
priorities of management—namely, cost and
delivery.

20. Policy Deployment
• Although kaizen strategy aims at making improvements,
its impact may be limited if everybody is engaged in
kaizen for kaizen’s sake without any aim.
• Management should establish clear targets to guide
everyone and make certain to provide leadership for all
kaizen activities directed toward achieving the targets.
• Policy Deployment (also called Hoshin Kanri in
Japanese) is a method for ensuring that the strategic
goals of a company drive progress and action at every
level within that company.

21. Policy Deployment
• Hoshin Kanri strives to get every employee
pulling in the same direction at the same time.
• This eliminates the waste that comes from
inconsistent direction and poor
communication.
• It achieves this by aligning the goals of the
company (Strategy) with the plans of middle
management (Tactics) and the work performed
by all employees (Operations).

22. Strategy Cascading
• First, top management must devise a long-term
strategy, broken down into medium-term and
annual strategies.
• Top management must have a plan-to-deploy
strategy, passing it down through subsequent
levels of management until it reaches the shop
floor.
• As the strategy cascades down to the lower
echelons, the plan should include increasingly
specific action plans and activities.

23. Organic Flow
• Hoshin Kanri creates an organic flow of
information that runs through an entire
company – much like the human nervous
system runs through the entire body.
• See Figure on next slide.

24. Organic Flow
• Goals and KPIs travel from the top down, while
results are returned from the bottom up.

25. Implementing Hoshin Kanri
• One way to understand Hoshin Kanri is to walk
through a typical set of implementation steps.
• Step One – Create a Strategic Plan
• Hoshin Kanri starts with a strategic plan (e.g. an
annual plan) that is developed by top
management to further the long range goals of
the company. This plan should be carefully
crafted to address a small number of critical
issues.

26. Create a Strategic Plan
• Key items to consider when developing the
strategic plan are:
• Focus on Five
• Focus on five goals (or less). The mere act of
writing down goals can create a (false) feeling of
progress – and more goals feels like more
progress. In reality, a goal only expresses intent.
Taking action is the hard part.

27. Create a Strategic Plan
• Every company has finite resources and
energy…and a limited attention span. Focusing
on a small number of goals makes success far
more likely than dissipating energy across
dozens of goals.
• Effectiveness First
• There is a well-known distinction between
efficiency and effectiveness: efficiency is doing
things right while effectiveness is doing the right
things.

28. Create a Strategic Plan
• Strategic goals need to be effective – doing the
right things to take the company to the next
level. If a goal doesn’t have that kind of broad
impact it’s probably not strategic.
• Evolution vs. Revolution
• Goals can be evolutionary (incremental goals
usually achieved through continuous
improvement) or revolutionary (breakthrough
changes with dramatic scope). Both are
legitimate and important forms of improvement.

29. Create a Strategic Plan
• Top Down Consensus
• Top management is responsible for developing
the strategic plan – it’s one of their most
important responsibilities. But taking the time to
consult with middle management serves two
useful purposes:
– It provides additional perspective and feedback
that helps craft stronger, more informed strategies
– It creates a sense of shared responsibility for the
plan and significantly more buy-in from middle
management

30. Create a Strategic Plan
• Careful KPIs
• A Key Performance Indicator (KPI) is a
measurable value that demonstrates how
effectively a company is achieving key business
objectives.
• Key Performance Indicators (KPIs) provide the
means for tracking progress towards goals.
• They also have a considerable ability to drive
behavior. So choose KPIs with care.

31. Create a Strategic Plan
• Careful KPIs
• It is essential to think through whether the
selected KPIs will drive the desired behavior
without unintended side effects.

32. Create a Strategic Plan
• Own the Goal
• Every goal should have an owner – a facilitator
and coach who has the skills and authority to
successfully see the goal through to conclusion.
– As a facilitator, the goal owner will remove
roadblocks and smooth the path to progress
– As a coach, the goal owner will track progress
and intercede if things get off track

33. Develop Tactics
• Step Two – Develop Tactics
• At a departmental level, mid-level managers
develop tactics that will best achieve the goals as
laid out by top management.
• One of the most important aspects of this
process is “catchball”…a back and forth
exchange with top management to ensure that
the strategy and goals are well understood, that
there is strong alignment between strategy and
tactics, and that the KPIs are meaningful and
appropriate.

34. Develop Tactics
• Tactics may change throughout the course of
fulfilling the strategy; flexibility and adaptability
are important characteristics of the process.
• As a result it is helpful to have regular progress
reviews (e.g. monthly), at which time results are
evaluated and tactics are recalibrated.

35. Take Action
• Step Three – Take Action
• At the plant floor level, supervisors and team
leaders work out the operational details to
implement the tactics as laid out by mid-level
managers.
• Once again, the principle of catchball applies, to
ensure that activities at the plant floor (and other
areas of the company) are strongly aligned with
tactics and strategy.

36. Take Action
• This is the level where goals and plans are
transformed into results. This is Gemba (the
place where real action occurs).
• Therefore, managers should stay closely
connected to activity at this level.

37. Review & Adjust
• Step Four – Review and Adjust
• So far the steps have focused on cascading
strategic goals down through levels of the
company; from top management all the way
down to the plant floor.
• Equally important is the flow of information in
the other direction – information about progress
and results. It is this second flow that creates a
closed loop system – enabling control and
adjustment of the entire process.

38. Review & Adjust
• Progress should be tracked continuously and
reviewed formally on a regular basis (e.g.
monthly).
• These progress checkpoints provide an
opportunity for adjustment of tactics and their
associated operational details.